What’s new in employment law for 2018?

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Below are some key dates for your diary. The most notable change is the one related to termination payments. It will no longer be possible to make tax free payments for any element of what would have been the employee’s notice period, whether or not you have a pay in lieu of notice clause in the employment contracts of your staff. The only termination payments which will be tax free will be those wholly unrelated to the contractual provisions, provided they are under £30,000. Personal injury payments will only be tax free if they relate to actual psychiatric illness or other recognised medical condition. Injury to feelings will not suffice.

1 April 2018

National living wage. The national living wage for workers aged 25 and over will increase by 33p to £7.83 an hour. The rates of other minimum wage bands will also increase The Low Pay Commission has already began to consult on the national minimum wage rates for 2019

Statutory payments. The level of statutory maternity, adoption, paternity and shared parental pay will increase to £145.18 on 1 April 2018 (with maternity allowance rising to the same rate on 9 April 2018). Statutory sick pay rises to £92.05 on 6 April 2018.

4 April 2018

Mandatory gender pay gap reporting. Large private and voluntary sector employers (those with 250 or more employees) are required to publish annual information on their gender pay gap under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 (SI 2017/172). First reports are due on 4 April 2018.

6 April 2018

Tribunal compensation limits. The maximum compensatory award for unfair dismissal will rise from £80,541 to £83,682. The maximum amount of a week’s pay, used to calculate statutory redundancy payments and various awards including the basic and additional awards for unfair dismissal, also rises from £489 to £508.

Termination payments. On 6 April 2018, all payments in lieu of notice, including payments where there is no contractual PILON power, will be subject to income tax and class 1 NICs. Effectively, employers will be required to subject to tax that part of a termination payment equivalent to the employee’s basic pay if and to the extent that notice is not worked. HMRC states that the new rules apply only where both payment and termination occurs on or after 6 April 2018. With effect from the same date, section 5 of the Finance (No.2) Act 2017 will also place payments for injury to feelings outside the exemption for injury payments (except where the injury amounts to a psychiatric injury or other recognised medical condition), and will grant powers to HM Treasury to vary the £30,000 threshold. Foreign service relief for UK resident employees (except in relation to seafarers) will also be abolished under section 10 of the Finance Act 2018.